Deputy Prime Minister and Finance Minister Chrystia Freeland on Tuesday tabled the government’s fall economic statement, which introduces a Canadian Mortgage Charter that will set expectations for how lenders interact with homeowners throughout the mortgage process. Freeland said the government’s goal is give homeowners the “support they need to afford their mortgages and keep their homes when renewing at a time of higher interest rates.
The stress test, also known as the minimum qualifying rate, seeks to insulate homeowners against sudden increases in interest rates from the Bank of Canada. The stress test requires borrowers to qualify for a mortgage at a rate of 5.25 per cent or two per cent above the contract rate, whichever is higher, in order to prove they could handle higher monthly payments if the central bank rate rose rapidly.
Finance Minister and Deputy Prime Minister Chrystia Freeland spoke about the benefits of not having to requalify at the higher bar in an appearance at the parliamentary finance committee on Thursday.5 students ingest edibles brought to Halifax elementary school, taken to hospital: policeDid you open an FHSA last year? Why your tax refund might be delayed“You do not need to requalify if you are an insured mortgage holder under the insured minimum qualifying rate, so you can switch lenders.
The report said policymakers should consider dropping expectations for lenders to reapply the stress test in cases of a “straight switch,” where a mortgage is transferred to a new financial institution without any change in the loan amount or amortization.